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Portas reviews locked-up high-street

14 December 2011

Landlords have welcomed a key recommendation from retail guru Mary Portas that would free them to deliver significant extra investment in the nation’s problem high streets.

The British Property Federation (BPF) urged ministers to accept one of the Portas Review’s central findings that would allow landlords to become high street investors by allowing them to contribute to Business Improvement Districts. This simple legislative change would allow property owners to match the funding that retailers put in to BIDs, successful vehicles that allow traders to come together to fund improvements in their area.

BPF chief executive Liz Peace said: “Business Improvements Districts (BIDs) are the embodiment of the ‘big society’, with local businesses giving time and money, often voluntarily, to make their high street a bit special. We are therefore delighted to see Mary recommending greater landlord involvement in BIDs, and also suggesting how they can be further enhanced with new powers, such as on planning.”

The BPF also welcomed the review’s emphasis on creating trade and driving footfall to town centres, its call to ease the “use class” system and so make it easier for property owners to change the use of key properties on the high street, and her recommendation to promote the inclusion of the High Street in new neighbourhood plans.

It also welcomed the emphasis on building greater ties between landlords and tenants, something the best landlords already excel at, its call to support the Leasing Code, and the use of lease structures other than upward only rent reviews.

“In today’s retail environment it is essential for landlords and retailers to understand each others’ needs inside out, and we have long supported the use of the Leasing Code,” commented Peace. “In reality however, only a fraction of new leases are signed with upwards only rent reviews. In fact with average lease lengths now at under six years, very few have any kind of rent review at all.”

However, the BPF warned that some of the review’s recommendations fundamentally misunderstood the problems facing the owners of empty shops – particularly its call to “explore further disincentives to prevent landlords from leaving units vacant”, and for the use of new Empty Shop Management Orders when landlords are deemed “negligent”. Peace said: “Policy on empty shops has become muddled and fails to differentiate between owners who can’t or won’t bring a property back into use. No landlord would deliberately leave a property empty – the government’s existing, damaging tax on empty shops means it makes no economic sense and simply sucks investment from high streets. ESMOs therefore need to be carefully constructed so they only affect those that won’t bring an empty back into use, and not those that can’t.”

The BPF also questioned the wisdom of giving the Secretary of State “exceptional sign off” for new out-of-town schemes, and for all new developments to have an “affordable shops” quota, said Peace. “We have to acknowledge that out of town shopping has some impact on trade in our town centres. As a society, however, we also want retail goods that are cheap and a sector that is efficient. Town Centre First is therefore supported in our sector as something which helps to guide that balance. However, for independent retailers to thrive they must be places where people wish to shop. Forcing landlords to offer reduced rent through affordable units is a sticking plaster over a much deeper problem. We will look at the tweaks Mary Portas is suggesting and will do so with an open mind, keen to support town centres, but also to protect UK retail competitiveness.”

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